Slide 1: Fourth Quarter & Full Year 2017 Earnings Results
POLARIS INDUSTRIES INC. Fourth Quarter & Full Year 2017 Earnings Results January 30, 2018
Slide 2: Safe Harbor & Non-GAAP Measures
SAFE HARBOR & NON-GAAP MEASURES Except for historical information contained herein, the matters set forth in this presentation, including management’s expectations regarding 2018 future sales, shipments, net income, and net income per share, operational initiatives and impact of tax reform are forwa
Slide 3: 2018 Guidance Adjustments
2018 GUIDANCE ADJUSTMENTS 2018 guidance excludes the pre-tax effect of acquisition integration costs of approx. $10 million, supply chain transformation costs of approx. $10 million to $20 million and the remaining impacts associated with the Victory wind down which is estimated to be in the range o
Slide 4: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Reconciliation of GAAP "Reported" Results to Non-GAAP "Adjusted" Results (In Thousands, except per share data; Unaudited) Three months ended December 31, Years ended December 31, Key Definitions: Throughout this presentation, the word 2017 2016 2017 2016 Sales $ 1,431,049 $
Slide 5: Non-GAAP Reconciliations - Segments
NON-GAAP RECONCILIATIONS - SEGMENTS Non-GAAP Reconciliation of Segment Results (In Thousands; Unaudited) Three months ended December 31, Years ended December 31, Three months ended December 31, Years ended December 31, 2017 2016 2017 2016 2017 2016 2017 2016 SEGMENT SALES SEGMENT GROSS PROFIT ORV/Sn
Slide 6: Scott W. Wine, Chairman & CEO
POLARIS INDUSTRIES INC. Scott W. Wine, Chairman & CEO Fourth Quarter & Full Year 2017 Earnings Results January 30, 2018
Slide 7: Fourth Quarter and Full Year 2017 Summary
FOURTH QUARTER AND FULL YEAR 2017 SUMMARY Q4 and FY 2017 financials met expectations with strong topline growth FY 2017 Sales* by Segment ORV/Snow N.A. retail sales increased 1% for full year; +5% in 2nd Half 9% Aftermarket 66% 362% Indian Motorcycles out-performed industry and gained share again 16
Slide 8: North American Powersports Retail Sales
NORTH AMERICAN POWERSPORTS RETAIL SALES Polaris Retail Sales Q4’17 Retail Sales by Business (vs. Q4’16) Fourth Quarter 1st Half / 2nd Half Full Year POLARIS INDUSTRY +5% Off-Road Vehicles low-single digits % low-single digits % +1% (estimated) Side-by-Sides low-single digits % -1% -4% -4% -5% ATVs f
Slide 9: North American Dealer Inventory
NORTH AMERICAN DEALER INVENTORY Polaris N.A. Total Dealer Inventory Q4 Total N.A. Dealer Inventory Year-over-year % Change in Units 2015 2016 2017 +4% +2% +1% +5% -10% +1% -8% -7% -6% Q1 Q2 Q3 Q4 Q4 2016 Existing ORV New ORV Snowmobiles Motorcycles Q4 2017 Models Models Polaris Q4 2017 N.A. dealer i
Slide 10: Management Leadership Changes
MANAGEMENT LEADERSHIP CHANGES Lucy Clark Dougherty Michael F. Donoughe SVP – General Counsel Chief Technical Officer Effective January 29, 2018 Effective January 22, 2018 Eight year career with General Motors Nearly 30 years of automotive technology experience Deputy GC for General Motors Internatio
Slide 11: Vision & Strategy
G& PeLaARis Vision & Strategy VISION STRATEGIC PURPOSE Guiding Fuel the passion of riders, workers Polaris is committed to being a customer centric, highly efficient growth Pri ncl pl es and outdoor enthusiasts around company. We relentlessly pursue product superiority, safety and value Best P le, B
Slide 12: 2018 Focus Areas
2018 FOCUS AREAS Safety and Quality Productivity Powerhouse Improve Customer & Dealer Relations Culture of Zero Defects Know our Consumer Better Improved Supplier Quality Sales Force Realignment – CRM Product Development Process 2.0 Improve Dealer Profitability Improved Customer Feedback Engineering
Slide 13: Mike Speetzen, EVP Finance & CFO
POLARIS INDUSTRIES INC. Mike Speetzen, EVP Finance & CFO Fourth Quarter & Full Year 2017 Earnings Results January 30, 2018
Slide 14: Q4 2017 GAAP and Adjusted Sales and Income
Q4 2017 GAAP AND ADJUSTED* SALES AND INCOME Q4 2017 GAAP and Adjusted* Sales Q4 2017 GAAP and Adjusted* Net Income ($ millions) ($ millions) +25% +18% +17% $95 $1,431 $1,430 $1,218 $76 $63 -50% $31 Q4 2016 Q4 2017 Q4 2017 Q4 2016 Q4 2016 Q4 2017 Q4 2017 Reported GAAP* Adjusted* GAAP* Adjusted* GAAP*
Slide 15: FY 2017 GAAP and Adjusted Sales and Income
FY 2017 GAAP AND ADJUSTED* SALES AND INCOME FY 2017 GAAP and Adjusted* Sales FY 2017 GAAP and Adjusted* Net Income ($ millions) ($ millions) +20% +20% +37% $5,428 $5,428 $4,517 $311 $213 $226 -19% $172 FY 2016 FY 2017 FY 2017 FY 2016 FY 2016 FY 2017 FY 2017 Reported GAAP* Adjusted* GAAP* Adjusted* G
Slide 16: Off-Road Vehicles (ORV) / Snowmobiles
OFF-ROAD VEHICLES (ORV) / SNOWMOBILES Q4 2017 ORV/Snow Segment Sales FY 2017 ORV/Snow Segment Sales 9% $3.6B %∆ 13% %∆ $3.3B 7% PG&A $0.9B $1.0B PG&A 13% 9% Snow Snow PG&A PG&A Snow 11% Snow 9% ORV ORV 14% ORV ORV Q4 2016 Q4 2017 FY 2016 FY 2017 Reclassified(1) Reclassified(1) ORV up 13% in Q4 2017
Slide 17: Motorcycles
MOTORCYCLES Q4 2017 Motorcycles Segment Sales FY 2017 Motorcycles Segment Sales ($ millions) ($ millions) 2% $699 18% 4% $104 $103 %∆ PG&A $576 $574 % ∆ $100 5% PG&A PG&A PG&A PG&A PG&A flat Victory Victory Victory Victory Indian Indian Indian 27% Indian Indian Indian 5% Slingshot Slingshot Slingsho
Slide 18: Global Adjacent Markets (GAM)
GLOBAL ADJACENT MARKETS (GAM) Q4 2017 GAM Segment Sales FY 2017 GAM Segment Sales ($ millions) ($ millions) 16% 19% %∆ $342 $397 %∆ $117 17% PG&A $98 PG&A 7% PG&A PG&A 21% 16% Q4 2016 Q4 2017 FY 2016 FY 2017 Polaris Commercial, Gov’t/Defense & Aixam GAM 19% due to Aixam and Goupil strong performance
Slide 19: Aftermarket
AFTERMARKET Q4 2017 Aftermarket Segment Sales FY 2017 Aftermarket Segment Sales ($ millions) ($ millions) Significantly 62% $885 Pics? $218 Other Other $134 Other $192 $109 $192 Other TAP Q4 2016 Q4 2017 FY 2016 FY 2017 Reclassified(1) Reclassified(1) TAP up $83 million in Q4; FY TAP contributed $68
Slide 20: 2018 Full Year Sales & EPS Guidance
2018 FULL YEAR SALES & EPS GUIDANCE Full Year Total Company Adjusted* Sales Guidance Full Year Adjusted* EPS Guidance ($ millions) ($ millions) +3% to +5% +24% to +28% $5,600 to $5,700 $6.00 to $6.20 $5,428 $4.85 FY 2017 FY 2018 FY 2017 FY 2018 Sales Sales EPS EPS Guidance Guidance Powersports marke
Slide 21: 2018 Full Year Guidance by Segment
2018 FULL YEAR GUIDANCE BY SEGMENT ORV/Snowmobiles Motorcycles Global Adjacent Markets Aftermarket ($ billions) ($ millions) ($ millions) ($ millions) Up low to mid-single $3.6B digits % PG&A PG&A Up Up Snow high-single Snow high-single Up digits % digits % mid-single $885 $574 PG&A $397 digits % PG
Slide 22: Gross Profit Margin Guidance
GROSS PROFIT MARGIN GUIDANCE Gross Margin FY 2017 Adjusted* Gross Profit 2018 Guidance Increase up 24.5% 24.7% 24.4% 25.9% 40 to 60 bps FY 2016 FY 2016 FY 2017 FY 2017 FY 2018 Adjusted GAAP* Adjusted* GAAP* Adjusted* Guidance VIP Promos/Price VIP FX Commodities/Investments Product Mix Warranty Promo
Slide 23: 2017 Ending & 2018 Financial Position Expectations
2017 ENDING & 2018 FINANCIAL POSITION EXPECTATIONS Cash Drivers Capital Summary December 2017 ($ millions) ($ millions) Variance to +$580 December 2016 Cash $ 138 +9% -$145 Debt /Capital Lease Obligations $ 913 -20% Shareholders’ Equity $ 932 +7% -$184 Total Capital $1,845 -8% $127 +$85 $138 -$235 D
Slide 24: Scott W. Wine, Chairman & CEO
POLARIS INDUSTRIES INC. Scott W. Wine, Chairman & CEO Fourth Quarter & Full Year 2017 Earnings Results January 30, 2018
Slide 25: 2018 Business Outlook
2018 BUSINESS OUTLOOK Economy improving, Powersports industry should benefit: ORV growing, motorcycles weak Oil and Gas improving; Ag mixed International continued improvement Competitive landscape remains aggressive with product and promo spend Tax Reform benefit expected Polaris direct benefit sig
Slide 26: Thank You
POLARIS INDUSTRIES INC. Thank You Questions?
Slide 27: Appendix
APPENDIX Q4 2017 SUPPLEMENTAL SALES PERFORMANCE (PG&A / INTERNATIONAL) Q4 2016 & 2017 INCOME FROM FINANCIAL SERVICES Q4 & FY'17 Earnings 27
Slide 28: Q4 2017 Supplemental Sales Performance
Q4 2017 SUPPLEMENTAL SALES PERFORMANCE Core Parts, Garments & Accessories (PG&A)* International** Q4 Sales 8% to 205 Million Q4 Sales 18% to $211 Million ∆ from Q4'16 Snowmobiles ORV / 28% GAM 7% Snow ORV 14% Motorcycles Motorcycles 60% 75% 9% Motorcycles ORV/ 9% 21% Global Adjacent 26% Snow Markets
Slide 29: Q4 2016 & 2017 Income from Financial Services
Q4 2016 & 2017 INCOME FROM FINANCIAL SERVICES Income from Financial Services Wholesale Credit PA Receivables Retail Credit ($ millions) ($ millions) 4% Approval Rate Penetration Rate $19 $19 1% 63% 63% $1,207 $1,193 Retail Retail Financing Financing 32% 32% Wholesale Wholesale Credit Credit Other Ot
Slide 30: Q4 & FY'17 Earnings
Q4 & FY'17 Earnings 30